The tortuous negotiations over the next Common Agricultural Policy reached a conclusion of sorts today although some of the details remain unclear. This morning BBC Radio Scotland invited me to speak about the implications of “capping the CAP” – an upper limit on what any claimant can receive in EU farm subsidy. You can hear the interview here.

This is a very short blog to highlight the key issues covered in the interview.

The current distribution of EU farm subsidy in Scotland is grossly unequal as the graph above shows. (see previous CAP blog) for further discussion). The top 10% of farmers receive 48.6% of the total 2011 Scottish farm budget of £710.4 million.

This is not surprising since the distribution of agricultural land in Scotland is concentrated in relatively few hands and Scottish farms (average size 107ha) are the largest in the EU. (1) Fully 75% of Scotland’s agricultural area is held by fewer than 9% of farmers in holdings of over 200ha in extent.

As a consequence of this and the operation of the system of Single Farm Payments (a system of transferable “entitlements” to subsidy that have been much abused over the past 10 years), the amount of subsidy received by the top 50 recipients has risen from £22 million in 2008 to £35 million in 2011.

The simple fact is that these 50 people (who include the Earl of Moray, Earl of Seafield, Earl of Southesk, Duke of Buccleuch and Duke of Roxburghe) do not need any of this money but they are the beneficiaries of the system.

There is a proposal to cap farm subsidies at €300,000 (£254,000). Neither this nor the question of whether it is to be mandatory or voluntary have yet been agreed and are to be dealt with separately within the Multi-Annual Financial Framework for the overall budget. (2) In any event, it may have little immediate effect since the Scottish Government seems keen to phase in the new CAP regime over, perhaps, as long as five years.

At a time when welfare payments to the poorest and most vulnerable in society are being capped at £26,000 per year, perhaps it is time to consider capping farmer welfare at a level considerably lower than £254,000

UPDATE 27 June 2013

George Lyon MEP reports in a tweet that capping will be voluntary. He says this is good news. I am not sure why.

Press Release from European Commission on the final shape of the CAP.

UPDATE 28 June 2013

Excellent analysis from Professor Alan Matthews – “A triumph for the Irish Presidency – a damp squib for CAP reform” including the astute observation that “The bulk of the CAP budget will continue to be spent on land-linked payments under Pillar 1 with no obvious rationale other than that to remove them is opposed by the current beneficiaries.”

(1) For detailed analysis of farm holdings see Eurostat – Large farms in Europe.

(2) According to Alyn Smith MEP today, “capping of direct payments is “square bracketed”. Council are adamant that capping should not be mandatory for Member States to apply.  A likely compromise will revolve around degressivity of payments above 150,000 EUR, with Member States deciding on the percentage to be applied.”



  1. Reiner Luyken

    I am all for not just capping but abolishing single farm payments. Innovative farmers don’t need them anyway. But isn’t it a good thing that Scottish farming is so highly developed that a guy who does well for himself can enlarge his family holding of, say, 1000 acres with 2000 acres tenanted land to produce 7000 quality lambs per year? Is farming not about producing food rather than fulfilling some social whims? Why do you always hark back to a few earls and dukes who are an absolute minority within the farming community?

    • That’s the problem, the 1% called dukes and earls, the absolute minority who own to much of the land. Farming should be about producing food socially. It would make more sense and better use of the land than the whims of the game hunting gentry we need to hark back to, till we rid ourselves of them.

      • hebrideanfarmer

        I agree Bob Hamilton; It’s the same old story, those in power will look after their own interests. Until their grip has gone, we will not move forward.

        • ‘Uncle Joe ‘Stalin summed it up so nicely ‘no oligarchy ever gives up its power voluntarily’ . Obviously a lot of ‘pot kettle and black’ in that one and arch Tory, Disraeli also did another telling summary ‘ All the great issues of politics eventually boil down to the ownership of land’. Aye and here we are, despite the 2003 land reform package, with 608 owners with half of Scotland. Joe and Ben must have had a holiday in the Highlands.

        • The removal of subsidies wouldn’t see the re distribution of land from those with vast amounts to small scale farmers. Arguably the reverse would happen. Look at two sectors in the UK that are not subsidised; poultry and pigs. Both sectors are controlled by a minority of producers and in the case of pig meat we now import 60%. How is this ‘socially sustainable’.

          Large farms have the benefit of economies of scale and subsidised or not they will have this luxury and have a greater chance of turning a profit.

          • Which is why we need land reform.

          • Reiner Luyken

            What is wrong with large farms? A small dairy farmer would never be able to adopt a system whereby he’d rotate his herd every day to a new field: for this he’d need at least 30 rather large paddocks. Such modern and environmentally truly sustainable grassland management requires economies of scale. It’s not for everybody, but it’s a great system. It requires hardly any concentrates.

            I don’t understand the “small is beautiful” ideology. Do we demand that, for instance, Steinway is being broken up and pianofortes are only being built in small workshops like at the beginning of the 19th century? That Steinway’s near monopoly in the concert halls is being brought to an end? The “small is beautiful” ideology has, incidentally, quite an unsavoury forerunner in Germany just as the other end of land reform agenda – community ownership. The latter was practised widely )and without success) in East Germany, the former was a favourite under the Nazis. There was a green wing within the Nazi party under Walther Darré who invented the concept of “The New Nobility of Blood and Soil”. He planted villages in particular in the eastern parts of Germany that were previously dominated by large estates. Some of these villages are still in existence. They look just like a modern greenie’s dream farming communities. Behind their appealing appearance lurks a sinister past.

            More to the point, why is farming not an industry like any other? Take fishing. There are huge pelagic purse-seiners, and there are small creel boats. Each has their place within a diverse scheme of things. a good creeler might make as much money compared to his investment as a big trwler – or even more. Equally, small farms may be better for some purposes than big ones. If a small farmer produces better quality and can therefore command a higher price for, say, some rare breed specialised meat, he’ll come out tops. But he can’t supply Morrisons or Sainsbury where people shop who can’t splash out top prices for exclusive food. Just let the market decide. Market like diversity, not uniformity.

      • Reiner Luyken

        What do you mean by “producing food socially”?

    • if you could get £ 500 per kilo for say Giant Hogweed ( imagining it contained a an anti-cancer chemical) would you grow food for £10 per kilo?

    • Slurry Stirrer

      Reiner Luyken……… Give that man a coconut. he has hit the nail right on the head “earls and dukes who are an absolute minority within the farming community” Yeah, but own most of scotland.

  2. Sergeant Matron

    The answer to this disgraceful waste of money is simple: scrap all farm subsidies and environmental grant schemes. Why should farmers not be exposed to the rigors of the free-market like everyone else? Also, why pay farmers not to damage the environment when other people get prosecuted when they damage the environment? If farmers damage the environment by their activities then they should be prosecuted.

    People need to eat so there will always be farmers who will need to produce food. Let the good farmer survive and let the bad go out to pasture. Since farmers are largely Tories surely they would agree to this; after all how much more ‘Socialist’ can you get than a subsidy?

    • Slurry Stirrer

      Sergeant, Food, health, shelter, education, defense, travel.
      all require subsidising, probably the most important being food, that’s where farming comes in. To allow scotland to be exposed to the rigors of the free market would soon see us importing most of our food, from countries which enjoy better climates and massive scale. But things can change and importing can be risky. So subsidising scottish farmers to encourage home production is pivitol in going some way towards food security, it also keeps the price down, which the tax payer likes.
      What the tax payers don’t like is farmers receiving subs which then allows them a swanky life style (NFU top dogs) basically farmers which have multiple holdings.
      What the tax payers REALLY don’t like is when millionaire land owners scoop up vast amounts of the subs. They quite often don’t produce food, don’t live here, and to make matters worse come and kill the wildlife which they have been paid to protect.
      Cap the CAP, one farm 1 payment, no trading of entitlements, residency laws and activity criteria.

      • Reiner Luyken

        What about barley farming for whisky and beer – should that be eligible for subsidies?

        • If you want to go down the Roman route of ‘Bread and circuses’ for the masses – very probably!

        • Slurry Stirrer


        • Slurry Stirrer

          No. in reply to Reiner

          • Reiner Luyken

            What about subsidies for growing bananas not far south from the artic circle? Has also been done, in the Achiltibuie Hydroponicum. Sounds daft? Yes, of course. But it’s true. It is also true that a local community company tried to use the Land Reform Act to buy that place. Subsidies have this awkward tendency to override common sense.

        • How much land do you own in Norway and why not ?

      • Sergeant Matron

        No they don’t. SOME health, shelter, education, defense and some aspects of our transport system are currently public services paid for either wholly or partially by taxation. Food is not an essential public service; it is a commodity – following your logic why not directly subsidise pharmaceuticals, cars, oil, coal etc? In fact, since food production is entirely reliant on hydrocarbons we should be MUCH more concerned about hydrocarbon security (estimates vary but it takes about 6kg of hydrocarbon to produce 1kg of food – utter madness I know but we are where we are…).

        Food security is a legitimate concern that is, sadly, always overplayed by farmers harking back to WWII (when the current subsisdy system was born) to defend the status quo. However, I think that if food security is to be taken seriously then the solution is not subsidies as they just distort the market and farmers spend there time chasing the biggest subsidies. If food security was to become a genuine political concern i.e. a necessary public service, then the land and means of production should become publicly owned and run on a plan to ensure food security funded by taxation i.e. farmers could become public servants employed by the state producing ‘secure’ food to a national plan based on the populations nutritional requirements. Fat chance…

        Your points about imports and ‘cheap food’ are also wrong: we already import vast amounts of food from all over the world so subsidising our farmers/landowners is already not working at all to prevent this practice. We also pay for our food twice – at the shop and through taxation, so how is that cheap when the CAP it costs the average household about £250-£300 p.a. on top of their food bill?

        I totally agree about landowners; of course no one likes millionaire fun-killing landowners scooping up public money but tinkering with the subsisdy system will not solve this as these people have the resources to play the system. A wholesale scrapping of subsidies combined with tackling the land rights issue is the best answer. Then as I said before the good farmers would thrive and we would have our land back.

        • Slurry Stirrer

          seargeant. i did not suggest that susidies would or could block imports/exports so why did you say that and then say im wrong??
          exports and imports of food are great for trading nations. we export a lot of expensive lamb and beef. and import a lot of cheap meat. the point i was making was that without subs we would be too heavily reliant on imports.
          do you think food would be cheaper or dearer without subs?
          amazing that you think farmers could become public servants and there to produce the nations food for a salary…. a couple of wet winters and most would resign.

          • Sergeant Matron

            Slurry I said you are wrong because you are wrong. Subsidies would not help with respect to food security as, like I said, farmers just chase the biggest money-making subsidy i.e. not produce food in a planned way that would ensure food security. Do you remember the milk lakes and butter mountains?

            Depending on the type of food it would either be similar in price or cheaper without subsidies. For a start – as I mentioned before – our household tax bills would be reduced by circa £250 – £300 p.a. if the CAP were abolished. Whilst not being an absolutist devotee of ‘free markets’ they often do work. Before subsidies surplus food was sold in our market towns across the UK, so it is hardly revolutionary at all to suggest that the buying and selling of food in a market economy is either fanciful or would suddenly make our food dearer. The price would be governed bu supply & demand.

            Why should farmers not be employed as public servants to work on a food security plan on publicly owned land? I’m afraid I do not understand your bizarre claim that farmers would resign after a couple of wet winters. If farmers were on a salary they would get paid just like anyone else in the public sector, regardless of the weather. Besides if they chose to resign then fine, maybe they are not the sort of people you would want in the job in the first place. At least a public plan/salary would be linked to meaningful work unlike subsidies which are often paid for hard to justify reasons.

  3. The problem is, these are not actually ‘farm subsidies’ they are ‘income subsidies’ and the way they work is, the bigger your income the more you get.

    This means the big landowner who is doing well get extra income he probably doesn’t need (for farming purposes) and the small farmer who would benefit gets very little.

  4. As is the procedure in other systems such as housing benefit; Housing grants and government grants, all have ceilings to which any individual cannot claim over. This ceiling is carefully balanced to both encourage and conversely discourage payment to those not in need and claiming an unfair amount of a finite purse. The percentage of those affected by the ceiling is carefully monitored and used in future to find a fair balance. This application works, but not so in the CAP, it is not applied ! Do we know what percentage of recipients are caught in the capping Do we know how many applications have been submitted for multiple holdings? again, questions that must be answered. Let’s get the figures aired so finally we can see why the CAP is so biased towards the large landholder, both tenant and landlord.
    One holding payment only, and a capping level that will reflect similar levels of capping across industries, and not support further feeding of the fat cats. This would ensure a just and sound approach. Whilst we have a system that supports multiple payments we will always have a struggle to attract new entrants. They cannot offer comparable rent levels to that of the established farmer who sees the subsidy £ signs dangling over the land without any further investment needed. So it continues, politicians and the NFU oppose measures to restrict payments to those huge farmers, and cry that it’s the ARTB that’s causing a lack of new entrants into agriculture. The murky cloud is lifting, and revealing a clear picture of what the industry leaders are up to.

  5. The industry leaders are trying to manage the effects on the whole industry, of a decreasing and changing CAP, now sitting at 40% of total EU budget, down from 75%. Farmers/producers are one part of the agricultural industry jigsaw with the infrastructure of many upstream downstream businesses dependent on the primary industry of farming. Scotland’s present CAP payments were NOT based on how much land a farm had, but on how much food the farmer/tenant produced in the base years 2001/02. An intensive beef finishing unit on a small acreage will have attracted a far larger subsidy than a large hill estate extensively rearing beef and sheep. A farming business of father mother and three sons/daughters might be running 4 farms under one name. A similar family might run 4 farms as individual holdings. If you weren’t producing in the base years you got no subsidy. What is causing lack of new entrants accessing land is complex and multiple but swelling the ranks of owner occupiers through ARTB will clearly not help new entrants. The new area payment system is to be phased in gradually and this change will create winners and losers. I’m told 20% of farmers receive no Direct payment. They will be winners. Intensive beef finishing units on small acreages will be losers with implications for processors and exports of Scotch beef. This latter consequence of the next CAP is what is exercising the minds of not just industry leaders but policy makers and political leaders. “Figures” can be accessed from Scottish Government and probably can even be Googled.

    • Slurry Stirrer

      Daye, Why do you believe that “swelling the ranks of owner occupiers through ARTB will clearly not help new entrants”? (1)The very fact that a family farm could take governance and free control of its affairs is very appealing to young family members who could be our next generation of new entrants. (2) If the ARTB was and should be granted to those who are under a limited partnership then there are loads of youngsters which could have a fully secure future in farming. (3) Scotland has tenants which have no written lease and may only be for the lifetime of the current tenant, similarly if they were able to enjoy an ARTB then again more youngsters which could take over the farm (4) If a tenant Becomes an owner through the ARTB that farmer on retiring could then let the farm to a local youngster.
      So your comment is actually quite silly! Do you think that if tenants get the ARTB then something strange happens to the land, which means that it could never ever be let again? or that the farmer becomes immortal and farms there until the end of time?
      Its whats best for people and communities. NOT as the factors like to say “whats best for the estate”. Estates taking units back in hand or letting them to an already established farmers and the pressures put on tenants from factors together with absentee landlords not allowing investment and stifling forward thinking is the biggest threat to new entrants.

      • I think Daye is just trying to protect, if not officially represent, the interests of the current land tenure system of her colleagues in Scottish Land and Estates ( SLAE—though their Anglo-Norman ancestors might have used a bit of ‘slay’ in attaining tenure).

        The current monopoly cabal find the concept of extensive private tenure involving tens of thousands of owner-occupiers in a rural property owning democracy utter anathema and correctly assume that such a concept is much more of a threat than any proposed socialist style expropriation to their cosy closed shop tenure. Land Rental Value collection is more worrying to them than any amount of CPOs.

  6. George Lyon reports that capping is to be voluntary – see UPDATE 27 June 2013.

  7. Today’s UPDATE “The bulk of the CAP budget will continue to be spent on land-linked payments under Pillar 1 with no obvious rationale other than that to remove them is opposed by the current beneficiaries.”

  8. Capping is very much a second-best solution. Means testing is the best way to ensure that an income support payment is directed towards those people whose incomes need supporting. Direct payments are an income support payment – that’s how they’re defined in EU treaties and that’s how they’re defended by farm unions: ‘without direct payments farmers could not survive’.

  9. Pingback: Why the world is a mess – Part I | My Observer Column

  10. Sergeant.I would love to farm in the public sector.Six weeks holidays(verses none in 6years),pension(verses none)overtime on 60/80 hours a week (verses maybe £8/hr).Maternity pay for women at your salary level instead of at about£100/wk;responsibility without having to take responsibility;no risk or loss of income.I could go on and on and on .Put like this I realise I,m the idiot wasting my time farming.Probably explains why few will stick it or take it up for long.I must have been keen and stupid at at sometime.